Resurrecting cost-sharing reduction (CSR) payments to payers with Affordable Care Act (ACA) plans or creating a reinsurance program, without additional reforms, could cause more problems than benefits for the individual market, according to a new Center on Budget and Policy Priorities report.
Two bipartisan proposals to restore CSR funding and create a reinsurance program may have worked last year, but things have changed since then — namely, Congress killed the ACA’s individual mandate penalty and the Trump administration has promoted short-term catastrophic plans with no ACA protections.
The individual market has adjusted since President Donald Trump ended CSR payments in October. Though many experts predicted that stopping CSR payments would further destabilize the individual market, the Center on Budget and Policy Priorities report said “ironically, ending CSR payments has helped the market weather some of the administration’s other harmful actions.”
The main reason ending the CSR payments didn't cause further problems in the market was that stopping the payments actually ended up reducing premium costs for lower-income Americans who got higher federal subsidies.
Restoring those payments without improving subsidies “would have significant adverse effects for consumers,” according to the report from the group, which backs the ACA.
Between 1.6 million and 3.3 million people, or 18% and 36% of users of the marketplace in 39 states with the federal-run exchange, could face higher costs if Congress restores CSR payments without additional subsidies.
The report suggested policymakers should also avoid legislation and policies that use reinsurance programs for high-risk pools, weaken consumer protections or make it harder for people to get health insurance.
“Not only would such proposals directly harm those affected, but some could undermine the goals of a stabilization bill. Policies that make it harder for people to enroll in coverage tend to disproportionately discourage healthier consumers, worsening the individual market risk pool and thus increasing premiums,” according to the report.
Passing just a reinsurance program or CSR payments may cause more harm, but the report said policymakers could adapt those bills to “the current environment.”
The Center on Budget and Policy Priorities offered three areas for policymakers to focus on:
- Avoid making coverage more expensive for moderate-income consumers
- Address the greatest risks for the individual market, such as blocking expansion of short-term catastrophic plans that could push healthy ACA plan members to drop coverage for the lower-cost plans
- Avoid weakening consumer protections or coverage
Regarding short-term plans, a recent Urban Institute report estimated that 2.5 million people will move from ACA plans to catastrophic plans next year compared to only 110,000 people at the beginning of 2017. The Urban Institute report also predicted that 6.4 million more people will be uninsured in 2019 because of recent policy changes, including ending the individual mandate penalty.
Urban Institute estimated 32.6 million people wouldn't have health insurance in 2019, higher premiums in the individual market, fewer healthy ACA plan members and higher federal government spending to insure fewer people.